What is SX40?
SX40 is the flagship Index of MCX-SX. It is a free float based index of 40 large cap - liquid stocks representing diversified sectors of the economy.
SX40 is designed to measure the economic performance with better representation of various industries and sectors based on ICB, leading global Industry Classification system from FTSE.
The Index is devised to offer cost-effective support for investment and structured products such as index futures and option, index portfolio, exchange traded funds, Index funds, etc.
Which companies are included on SX40?
SX40 includes companies that have a minimum free float of 10% and is within the top 100 liquid companies. The top 10 stocks account for a 62.4 per cent weightage on the SX-40 as compared to 57.4 per cent on the Nifty and 67.8 per cent on the Sensex.
The stocks in SX40 have an industry cap at 20% +/- 2% band. The index allows fast entry for companies with better free float, market cap and liquidity.
What is the weight?
The weight of the largest constituent on the SX-40 is 9.4%. The top 10 holdings od SX40 stans at 62.4%, Nifty at 57.4% and Sensex 67.8%.
What is the selection criteria?
Underlying stocks must have a positive net-worth
• The stock must have free float of at least 10% & within top 100 liquid companies
• Industry capping - at 20% (±)2% band
• Fast Entry for companies with better free float market cap and liquidity
• Top 40 companies meeting above criteria constitute SX40.
Key features of the index
Superior return & risk adjusted return
• A unique Index of India benchmarking global best practices
of index designing
• Better Reflection of the Organised Sector in the Economy through enhanced industry representation
using ICB of FTSE
• Rule based, transparent & replicable
• Industry capping eliminates industry bias and enhances Index stability
• Lower churning rate
• Low cost for funds (MFs, ETFs) construction and maintenance
• Low tracking error for passive port- folio management (MFs, ETFs etc).